Ethics in Accounting

Ethics in Accounting

Why would reclassifying period costs and product costs increase this period's reporting earnings?

The classification of period costs into product costs increases the reporting earnings of the period. The period cost is treated as an expense in the income statement of the current period in which it occurred. It is because the period costs are not incorporated in the valuation of inventory of the company. The product costs occur when the company purchases goods and produce those goods for the sale or resale in the market. The products costs are related to the products in a ...